JP Morgan raises Apple price target to $420, Kaufman Bros to $395

Citing growth potential of the iPhone, iPad and Mac, two major financial firms on Thursday increased their price targets for Apple stock.

JP Morgan

Analyst Mark Moskowitz sees Apple stock growing to $420 in the next year with the company riding high on another growth spurt. He believes Apple will see balanced growth along all of its main product lines.

"While the iPhone and iPad are expected to be the biggest contributors to revenue growth in the near to mid term, the Mac business is expected to be an important contributor as well," he wrote in a note to investors Thursday. "By the end of (fiscal year) 2011, we expect the Mac to regain prominence in the Apple growth story as the company addresses the multi-billion dollar opportunity in the Target Zone of PCs."

He also said that the anticipated launch of the iPhone on Verizon's network in the U.S. will increase the devices sale's momentum, adding at least $1.25 incremental earnings per share on an annual basis.

Moskowitz also significantly increased his projected iPad sales in 2011, from a previous prediction of 21.3 million to his new projection of 26.6 million. The analyst sees Apple selling a total of 60 million iPhones, 46 million iPods, and 17.3 million Macs in the company's 2011 fiscal year.

In July, Moskowitz increased his projected price for AAPL stock to $390 by Dec. 2011, also citing growth of the iPhone and iPad.

Kaufman Bros.

Analyst Shaw Wu said checks with supply chain have found continued constraints for the new MacBook Air, as well as shortages of the iPod nano and some iPod touch models. He also said that iPhone and iPad momentum are stronger than he previously expected.

"Our triangulation of data points from our proprietary checks and market research indicate that the strength we saw through Black Friday weekend... is carrying into the present," Wu said. "This is leading us to believe this will be another holiday season with more users allocating more of their tight budgets to Apple's platforms."

Accordingly Wu has raised his estimates for Apple, increasing the price target from $380 to $395. He also sees Apple selling 4.2 million Macs in the December quarter, along with 6.1 million iPads, 16 million iPhones and 17 million iPods.

All of these reports should come with the caveat "all other things being equal." And since when are all other things equal? If employment growth continues to be anemic, if GDP reports continue to underwhelm, if the European debt crisis spreads, all bets are off.

All of these reports should come with the caveat "all other things being equal." And since when are all other things equal? If employment growth continues to be anemic, if GDP reports continue to underwhelm, if the European debt crisis spreads, all bets are off.

How long did Shaw Wu have his $250 price target while AAPL was sitting at $100 after the crash? Need some disclaimers...

All of these reports should come with the caveat "all other things being equal." And since when are all other things equal? If employment growth continues to be anemic, if GDP reports continue to underwhelm, if the European debt crisis spreads, all bets are off.

Apple did amazingly well during the market crash, bank failures and recession. I'm a big Apple fan, but even I thought, especially because Apple has always been considered to be a high price producer, that Apple was going to have really tough times during that period (which largely continues today.)

Obviously people who are out of work or who have lost their homes are not customers for most of Apple's products. But I think in times when money is tight, people buy fewer things, but they want the things they do buy to have quality. And Apple is perceived to have quality and to be a "must have". I ride the NYC subways and I'm constantly amazed at the number of people walking around with an iPad or a new iPhone, most of whom are not business people or college students from the suburbs, but average, poorly dressed, working class people, frequently traveling to/from not great neighborhoods. This would surprise me in good times, but it especially surprises me in bad times. But the Apple stores in NYC are crowded ALL the time (and at least one of them is open 24 hours a day.)

I'm a tech consultant and the other thing I've seen is a remarkable turnaround in businesses for Apple's products, driven initially by the iPhone and now by the iPad. Businesses which would never consider anything but cheap Dell machines were "forced" by their employees to adopt the iPhone and then iPhone users started using the iPad. And then people started adopting Macs and while generally, they're limited to certain departments (usually creative tasks, marketing, etc.), I'm seeing more and more. And since so many people work wirelessly today over WiFi, the network communications issues are diminished.

All of these reports should come with the caveat "all other things being equal." And since when are all other things equal? If employment growth continues to be anemic, if GDP reports continue to underwhelm, if the European debt crisis spreads, all bets are off.

I'm not so sure about that. People still want some luxury. If what we read about Tv sales being down at BB because iPads were selling is true, which was partly retracted later, because, I think, from outside pressure, then people are shifting their priorities. If those priorities are permanently shifted, then Apple is in a good position. People may not want to spend $1,500 for a 3D Tv, but they might not mind spending $650 for an iPad, or $299 for an iPod Touch. They don't seem to mind spending for a MacBook Air.

I'm not so sure about that. People still want some luxury. If what we read about Tv sales being down at BB because iPads were selling, which was partly retracted later, because, I think of outside pressure, is true, then people are shifting their priorities. If those priorities are permanently shifted, then Apple is in a good position. People may not want to spend $1,500 for a 3D Tv, but they might not mind spending $650 for an iPad, or $299 for an iPod Touch. They don't seem to mind spending for a MacBook Air.

Frankly, one function I'd like to see added to the iPad would be a digital over the air antenna to receive live TV service. The iPad would take a huge chunk out of HDTV sales if this happened.

All of these reports should come with the caveat "all other things being equal." And since when are all other things equal? If employment growth continues to be anemic, if GDP reports continue to underwhelm, if the European debt crisis spreads, all bets are off.

You would think so but AAPL seems to have weathered amazingly well during the last few bleak years.

From Apple ][ - to new Mac Pro I've owned them all.Long on AAPL so biased"Google doesn't sell you anything, Google just sells you!"

I'm not so sure about that. People still want some luxury. If what we read about Tv sales being down at BB because iPads were selling is true, which was partly retracted later, because, I think, from outside pressure, then people are shifting their priorities. If those priorities are permanently shifted, then Apple is in a good position. People may not want to spend $1,500 for a 3D Tv, but they might not mind spending $650 for an iPad, or $299 for an iPod Touch. They don't seem to mind spending for a MacBook Air.

3D Movies on the iPad isn't so far fetched either. At least you could wear those funny specs in private

From Apple ][ - to new Mac Pro I've owned them all.Long on AAPL so biased"Google doesn't sell you anything, Google just sells you!"

Apple did amazingly well during the market crash, bank failures and recession. I'm a big Apple fan, but even I thought, especially because Apple has always been considered to be a high price producer, that Apple was going to have really tough times during that period (which largely continues today.)

Quote:

Originally Posted by melgross

I'm not so sure about that. People still want some luxury. If what we read about Tv sales being down at BB because iPads were selling is true, which was partly retracted later, because, I think, from outside pressure, then people are shifting their priorities. If those priorities are permanently shifted, then Apple is in a good position. People may not want to spend $1,500 for a 3D Tv, but they might not mind spending $650 for an iPad, or $299 for an iPod Touch. They don't seem to mind spending for a MacBook Air.

I wasn't speaking so much to the ability to Apple to shift product as to where the value of the stock goes. They were still selling products during the financial crisis, but that didn't matter to the stock market -- at the bottom, AAPL had fallen 60%, along with the rest of the market.

Watching the stock market these days is a bit like watching a patient in intensive care. Rallies, setback, rallies, setbacks. Underlying issues keep taking over. So while it's fine to establish price targets for a stock based on the company's fundamentals, I think we do well to understand that external events are really in control of the macro picture for the markets. For AAPL to reach these targets, all needs to go well not just for Apple but for the world economy, otherwise the stock markets are going to be weighed down with overriding concerns -- and AAPL along with it.

Frankly, one function I'd like to see added to the iPad would be a digital over the air antenna to receive live TV service. The iPad would take a huge chunk out of HDTV sales if this happened.

I doubt that would ever happen. It would need a Tv tuner, and most places, the reception would really suck. I've had numerous portable Tv products, and none of them ever had good reception. Today's standards are higher. People expect perfection. Analog reception is problematic, and digital reception is even less available. It would also significantly add to the cost. I think Apple want to lower the prices, not raise them. Otherwise, I like the idea in theory.

I wasn't speaking so much to the ability to Apple to shift product as to where the value of the stock goes. They were still selling products during the financial crisis, but that didn't matter to the stock market -- at the bottom, AAPL had fallen 60%, along with the rest of the market.

Watching the stock market these days is a bit like watching a patient in intensive care. Rallies, setback, rallies, setbacks. Underlying issues keep taking over. So while it's fine to establish price targets for a stock based on the company's fundamentals, I think we do well to understand that external events are really in control of the macro picture for the markets. For AAPL to reach these targets, all needs to go well not just for Apple but for the world economy, otherwise the stock markets are going to be weighed down with overriding concerns -- and AAPL along with it.

Oh, ok. I wasn't referring to the stock price. The stock dropped unrealistically during the recession. Fortunately, I was able to gather some cash, and buy more. Not nearly as much as I would have liked, partly because of my wife's reticence over it at the time. Now, she doesn't want to talk about that.

I'm not certain if the market is in the same mood though. We may yet see a pullback, but I don't think to that extent. If it does, I'm in!

Oh, ok. I wasn't referring to the stock price. The stock dropped unrealistically during the recession. Fortunately, I was able to gather some cash, and buy more. Not nearly as much as I would have liked, partly because of my wife's reticence over it at the time. Now, she doesn't want to talk about that.

I'm not certain if the market is in the same mood though. We may yet see a pullback, but I don't think to that extent. If it does, I'm in!

We're always going to have pullbacks, but a lot of the critiques we see of these analyst projections essentially point to the overriding swings in markets. We should all understand that they have a way of obviating any individual stock predictions. The markets are so cautious now, and I think it's also worth pointing out that AAPL has underperformed the broader indexes for the last two months.

I doubt that would ever happen. It would need a Tv tuner, and most places, the reception would really suck. I've had numerous portable Tv products, and none of them ever had good reception. Today's standards are higher. People expect perfection. Analog reception is problematic, and digital reception is even less available. It would also significantly add to the cost. I think Apple want to lower the prices, not raise them. Otherwise, I like the idea in theory.

The problem is rather that there are too many different technology standards in use. Apple does not really build products for one country / area. All their products are global. It is really best to leave that to accessory makers, plug a tuner into the dock connector and put the app on the AppStore. There are several countries where just owning a tuner would result in mandatory fees, so a built-in tuner could even cause potential buyers to turn away.

I bought the "tizi" (a portable DVB-T tuner, http://www.tizi.tv/en/index.html) and it is simply amazing. Picture quality is crystal clear, there is an EPG, it even receives digital radio, and it can record TV shows right on the iPhone/iPad. This product would make little sense for Apple, but it can make a lot of sense for a smaller company.

How long did Shaw Wu have his $250 price target while AAPL was sitting at $100 after the crash? Need some disclaimers...

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Um, it sat at $100 for a few months and then began an astounding climb-back to that target in about a year. That's REALLY fast (indicating how spoiled AAPL holders have become.)
Wu was spot on (at least in that case.)

Watching the stock market these days is a bit like watching a patient in intensive care. Rallies, setback, rallies, setbacks. Underlying issues keep taking over. ..

There is nothing new or unique to AAPL about that observation. That's always been the nature of the stock market.
That's why equities are not a game for casual investors. You either do your research and watch ALL factors, or grab an index fund and stick with that.

We're always going to have pullbacks, but a lot of the critiques we see of these analyst projections essentially point to the overriding swings in markets. We should all understand that they have a way of obviating any individual stock predictions. The markets are so cautious now, and I think it's also worth pointing out that AAPL has underperformed the broader indexes for the last two months.

Yes, I've noticed that. We've had a few analysts statements that drove prices down a few times over that time. But if Apple has a good quarter, I think it will bounce. We're at new highs for the stock as it is. I thought it had risen a bit too much for a while previously anyway. As I'm long, I don't worry about the shorter ups and downs. Even though some are saying that a Verizon phone is baked into the stock price, I don't believe that to be entirely true.

There is nothing new or unique to AAPL about that observation. That's always been the nature of the stock market.
That's why equities are not a game for casual investors. You either do your research and watch ALL factors, or grab an index fund and stick with that.

Right. But we constantly hear criticisms on these board about how "clueless" any given AAPL analyst is because they got some forecast wrong. A better understanding of the constraints and limitations of forecasting seems to be in order.

Quote:

Originally Posted by melgross

Yes, I've noticed that. We've had a few analysts statements that drove prices down a few times over that time. But if Apple has a good quarter, I think it will bounce. We're at new highs for the stock as it is. I thought it had risen a bit too much for a while previously anyway. As I'm long, I don't worry about the shorter ups and downs. Even though some are saying that a Verizon phone is baked into the stock price, I don't believe that to be entirely true.

In the last couple of weeks we've also seen a few fairly sizable upgrades in target prices, including today, which has moved the stock price virtually not at all. And not a single lowering of target price has occurred. Yet, the DJI has actually outperformed AAPL over the last two months, and don't even compare it to the NASDAQ composite, unless you want to feel a bit queasy. I won't pretend to know what's going on or how long it will last, but I really don't like the looks of this chart.

Um, it sat at $100 for a few months and then began an astounding climb-back to that target in about a year. That's REALLY fast (indicating how spoiled AAPL holders have become.)
Wu was spot on (at least in that case.)

No... he dropped the number to $125 before it started to climb, IIRC. Could be mixing him up with Katie Huberty's nonsense.

Right. But we constantly hear criticisms on these board about how "clueless" any given AAPL analyst is because they got some forecast wrong. A better understanding of the constraints and limitations of forecasting seems to be in order.

In the last couple of weeks we've also seen a few fairly sizable upgrades in target prices, including today, which has moved the stock price virtually not at all. And not a single lowering of target price has occurred. Yet, the DJI has actually outperformed AAPL over the last two months, and don't even compare it to the NASDAQ composite, unless you want to feel a bit queasy. I won't pretend to know what's going on or how long it will last, but I really don't like the looks of this chart.

Didn't one of the big ones take it off their preferred list the other day, and then it went down? Don't remember who that was offhand. The good thing is that Apple IS hitting new highs. These other companies, except for IBM, have just been making up some lost time.

What I don't understand, is why MS has been rising lately, with all the negativity going on around them, including one big downgrade.

Right. But we constantly hear criticisms on these board about how "clueless" any given AAPL analyst is because they got some forecast wrong. A better understanding of the constraints and limitations of forecasting seems to be in order.

Maybe you have forgotten how absurdly wrong the analysts were during the majority of the last decade, but I haven't.

Didn't one of the big ones take it off their preferred list the other day, and then it went down? Don't remember who that was offhand. The good thing is that Apple IS hitting new highs. These other companies, except for IBM, have just been making up some lost time.

What I don't understand, is why MS has been rising lately, with all the negativity going on around them, including one big downgrade.

One just removed it from their "special picks" list, or some silly thing like that. They didn't change their investment recommendations, just moved the spotlight a bit in another direction. In fact AAPL has been drifting for two months now. When the NASDAQ composite rises three times faster than AAPL over a pretty substantial period of time, then something has changed, at least for now.

Quote:

Originally Posted by monstrosity

Maybe you have forgotten how absurdly wrong the analysts were during the majority of the last decade, but I haven't.

One just removed it from their "special picks" list, or some silly thing like that. They didn't change their investment recommendations, just moved the spotlight a bit in another direction. In fact AAPL has been drifting for two months now. When the NASDAQ composite rises three times faster than AAPL over a pretty substantial period of time, then something has changed, at least for

I can't remember when, at least when there wasn't any bad news to drive the movement. But if you're bored and looking for something to do....

This is the movement of the stock (apple's) as compared to the "big picture". It's stalled before, this year, and went down too. But the trend has been upwards, which is why it's up a fair amount more than the market. I just don't think a bit of a stall is important. It's not even the worst one. More a slowing down for a short while.

I just tried the links. You have to set them for a years trend yourself. It reverts back to five days in the link.

This is the movement of the stock (apple's) as compared to the "big picture". It's stalled before, this year, and went down too. But the trend has been upwards, which is why it's up a fair amount more than the market. I just don't think a bit of a stall is important. It's not even the worst one. More a slowing down for a short while.

I guess I was bored a little this evening and decided to look at rolling two-month segments back to the end of 2008, AAPL vs. NASDAQ composite. I found two other two-month periods where AAPL underperformed the index, 11-2009 to 1-2010, in an up market (AAPL flat, NAS up 4%); then 6-2010 to 8-2010, in a down market (AAPL down 7%, NAS down 5.5%). In round numbers. I measured from the middles of the months, if you're feeling bored too and want to check my work. For the rest of the periods, few were even close, with AAPL strongly outperforming the index in nearly every one. So you could be right, it might just be a stall or a pause. I hope you're right.

As for MSFT, that's a mystery, but I confess to not following Microsoft earnings reports very closely. Still if you asked anyone who hadn't already looked, which of these stocks were the better investment over the last two months, few would answer correctly.

More curious factoids: During the three periods where the NAS has outperformed AAPL, MSFT has also outperformed AAPL.